In every business relationship there is the potential for conflict over contractual agreements or business operations. When such conflicts arise, there is no need to incur the onerous expense and delays involved in traditional litigation. There are readily available alternative dispute resolution procedures that will enable you to resolve your disputes relatively quickly, fairly and cost-effectively.

Resolving international disputes demands special skills, experience and cultural sensitivity. That’s why thousands of attorneys and their clients turn to JAMS. We are a recognized leader in cross-border mediations and arbitrations, with resources wherever you or your clients do business.

Colleges and universities need to manage, resolve and prevent conflict. As a worldwide leader in dispute resolution, JAMS is singularly qualified to provide a comprehensive range of unique and effective solutions for problems facing students, faculty and administration.

The JAMS ADR blog serves to engage our clients, the legal community and the public in a discussion about alternative dispute resolution. As leaders in mediation, arbitration and more, we strive to remain at the forefront of legal developments, trends and news in areas of law that pertain to ADR.

International commercial arbitration is one of the fastest-growing practices at JAMS. With industry leading rules, JAMS is praised for a highly experienced panel with specialties in many key areas, multilingual case management capabilities, and unparalleled service. JAMS specializes in the resolution of international disputes and is one of the largest providers of commercial arbitration in the world.

JAMS ADR Blog

LIBOR Liability: What’s next in Securities Litigation?

August 14, 2012

V. James Mann is a New York-based JAMS panelist who spent 25 years as an in-house attorney with Merrill Lynch, where he represented the broker-dealer, investment banking, institutional trading and sales businesses.

Securities litigators looking for the “next big thing” cannot have failed to take note of the manipulated LIBOR (London Interbank Offered Rate) investigations and potential prosecutions in the United States and Europe. Although it is premature to predict the ultimate success of likely lawsuits, a wave of class action litigation is probably on the horizon.

Complex issues involving damages and loss causation are likely to feature prominently in many of those cases, and the risk and the cost to both sides will be significant. For example, an institution with a complex balance sheet will probably both make and receive LIBOR-linked payments. Netting such payments to calculate losses measured in a few basis points may prove both challenging and costly. As a consequence, a jury trial is not likely to be attractive to many litigants, and it is likely that significant cases involving LIBOR-manipulation will be resolved without a trial. In those cases that survive motions to dismiss or for summary judgment, a sophisticated and knowledgeable mediator can offer valuable insights and assistance to the parties as they negotiate the labyrinth of what will otherwise be a difficult, costly and time-consuming process.

LIBOR is used as a benchmark rate for credit and other financial transactions around the world, and was established in the 1980s as demand grew for an accurate measure of the rate at which banks would lend to each other. LIBOR is set for different currencies based on different panels of banks by asking them at what rate they could borrow funds “in a reasonable market size.” The rate is established by averaging the rates submitted, after excluding the highest and lowest rates.

In June, Barclays PLC paid approximately $450 million in fines to U.S. and British authorities, and admitted that some traders and executives tried to fix the LIBOR rate by submitting lower than justified rates. The scandal has since spread to more than 16 financial institutions.

Potential plaintiffs without direct contractual or other relationships with alleged manipulators might face some challenges to bringing suit against the wrongdoers, and may find themselves limited to claims against defendants with whom they are in privity.

Class action cases often settle for very little and often institutional plaintiffs choose to opt out of these cases in favor of a separate lawsuit. The Wall Street Journal recently reported that several large mutual fund companies, including Blackrock, Inc. and Vanguard Group, Inc., are exploring the viability of LIBOR-manipulation litigation. These companies are paying particular attention to whether they have suffered compensable damages. Nonetheless, cases will be brought. But by utilizing the confidential and efficient nature of ADR, resolution can occur in a more timely matter than a lengthy and costly litigation.

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The JAMS ADR blog serves to engage our clients, the legal community and the public in a discussion about alternative dispute resolution. As leaders in mediation, arbitration and more, we strive to remain at the forefront of legal developments, trends and news in areas of law that pertain to ADR.

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